Employment Law

In the case of a person who has already been terminated, involuntarily, if without notice and without cause, there may still be a way to recover benefits that have been potentially "forfeited." In New York, courts disfavor non-competition agreements involving employees on public policy grounds. Our economy is premised on the competition engendered by the uninhibited flow of services, talent and ideas.

Therefore, no restriction should fetter an employee's right to apply to his own best advantage the skills and knowledge acquired by the overall experience of his previous employment. This includes those techniques which are but skillful variations of general processes known to the particular trade.

It is important to note that under the employee-choice doctrine, a restrictive covenant will generally be enforced without regard to its reasonableness if the employee has been afforded the choice between not competing (and thereby preserving his benefits) or competing (and thereby risking forfeiture).

This is the underlying premise of forfeiture-for-competition clauses found in incentive compensation plans and applies to an employee terminating his/her employment relationship, voluntarily.

If it is the employer who has terminated the employment relationship, involuntarily and without cause, then New York Courts will examine the reasonableness of the restrictions of the forfeiture-for-competition clause.

Eric Shames is a lawyer in New York, NY practicing in Securities and Financial Services Law; Litigation and Arbitration, Corporate Formation, Business Management, Corporate Secretarial Services.